On 21 April 2022 the OECD’s Forum on Tax Administration (FTA) issued a publication entitled Tax Administration: Digital Resilience in the COVID-19 Environment. The report comments on the results of a digital resilience survey of 32 member administrations of the FTA.
The move to remote working during the pandemic has created challenges for the normal operations of tax administrations. In this period the tax administrations have had difficulties in dealing with documents such as letters and forms; field audits; communication with taxpayers; and systems maintenance. Also, the tax administrations had to take on additional tasks in providing financial and other support to individuals and businesses in the pandemic.
It has become clear that the digitalisation of tax administrations can significantly help in dealing with the crisis. Many tax administrations have been moving many of their processes online in recent years replacing in-person communication with virtual or digital communication, and the pandemic has reinforced this trend.
Around half the 32 tax administrations surveyed considered their digital channels sufficient to deal with the increased demand, while others dealt with issues by introducing improvements to existing services or by developing further services such as virtual assistants.
The changes needed to adjust to a remote working environment and develop new digital services have been challenging and carry certain risks. At the height of the pandemic around one third of the tax administrations surveyed remained fully operational, while the other two-thirds were only partly operational. More than one-third of the tax administrations experienced IT system outages for more than one hour and in many cases this affected the delivery of critical functions. Three-quarters of the tax administrations surveyed suspended or severely reduced their regular tax audit work.
Tax administrations have generally been effective in coping with the challenges faced during the pandemic and many of them have made improvements very quickly. The number of tax administration staff working remotely increased significantly during the peak of the crisis. Two-thirds of the tax administrations provided more IT equipment for staff and adapted their working methods, for example by moving parts of their field audit work to a digital environment.
The urgent need to support individuals and businesses in the pandemic required tax administrations to adapt their existing IT project development practices, with many adopting flexible project development methodologies. The experience gained during the crisis has influenced the future strategies of tax administrations and their methods of engagement with taxpayers.
Owing to their experiences in the pandemic around 60% of the surveyed tax administrations have considered changes to their digitalisation strategy. Around 75% of the tax administrations surveyed had made plans to continue the process of moving field audit work to a digital environment in the future. Most of them intended to make additional changes to increase the resilience of their IT systems to prepare for future crises.
